Plaza Company acquires an 80% interest in Scenic Company for $200,000 cash on January 1, 20X1. On that date, Scenic's equipment (remaining economic life of 5 years) is undervalued by $25,000; any excess of cost over book value is attributed to goodwill. Scenic's balance sheet on the date of the purchase is as follows:
The controlling interest in consolidated net income for 20X1 is $97,900; the noncontrolling interest is $6,000. On December 31, 20X1, Plaza acquired a 15% interest in Adams, Inc. and, in an unrelated transaction, issued additional common stock. Dividends declared and paid during the year by Plaza and Scenic were $30,000 and $15,000, respectively. There are no purchases or sales of property, plant, or equipment during the year. Based on the following information, prepare a statement of cash flows using the indirect method for Plaza Company and its subsidiary for the year ended December 31, 20X1.
Required:
Prepare the consolidated statement of cash flows for the year ended December 31, 20X1, for Plaza and its subsidiary.

Question

Plaza Company acquires an 80% interest in Scenic Company for $200,000 cash on January 1, 20X1. On that date, Scenic's equipment (remaining economic life of 5 years) is undervalued by $25,000; any excess of cost over book value is attributed to goodwill. Scenic's balance sheet on the date of the purchase is as follows:  
The controlling interest in consolidated net income for 20X1 is $97,900; the noncontrolling interest is $6,000. On December 31, 20X1, Plaza acquired a 15% interest in Adams, Inc. and, in an unrelated transaction, issued additional common stock. Dividends declared and paid during the year by Plaza and Scenic were $30,000 and $15,000, respectively. There are no purchases or sales of property, plant, or equipment during the year. Based on the following information, prepare a statement of cash flows using the indirect method for Plaza Company and its subsidiary for the year ended December 31, 20X1.  
Required:
Prepare the consolidated statement of cash flows for the year ended December 31, 20X1, for Plaza and its subsidiary.

Quizplus · Accepted Answer

The Answer of Plaza Company acquires an 80% interest in Scenic Company for $200,000 cash on January 1, 20X1. On that date, Scenic's equipment (remaining economic life of 5 years) is undervalued by $25,000; any excess of cost over book value is attributed to goodwill. Scenic's balance sheet on the date of the purchase is as follows:  
The controlling interest in consolidated net income for 20X1 is $97,900; the noncontrolling interest is $6,000. On December 31, 20X1, Plaza acquired a 15% interest in Adams, Inc. and, in an unrelated transaction, issued additional common stock. Dividends declared and paid during the year by Plaza and Scenic were $30,000 and $15,000, respectively. There are no purchases or sales of property, plant, or equipment during the year. Based on the following information, prepare a statement of cash flows using the indirect method for Plaza Company and its subsidiary for the year ended December 31, 20X1.  
Required:
Prepare the consolidated statement of cash flows for the year ended December 31, 20X1, for Plaza and its subsidiary.

Plaza Company Acquires an 80% Interest in Scenic Company for $200,000